Oil rises after rocket attack in Baghdad shakes investor confidence

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Reuters
KEY POINTS
  • Oil prices climbed on Thursday after a rocket attack on Baghdad triggered fresh concern over the potential for conflict in the Middle East.
  • Brent crude futures rose 43 cents, or 0.7%, to $65.87 a barrel by 0109 GMT, after seesawing through Wednesday to end with a 4.1% tumble.
  • West Texas Intermediate futures added 61 cents, or 1%, to $60.22 after falling nearly 5% in the previous session.
RT: Iraq oil OPEC 181212
A worker is seen at the new CPF3 oil station in the Halfaya oilfield in southern of Maysan province, Halfaya, Iraq December 12, 2018.
Essam al-Sudani | Reuters

Oil prices climbed on Thursday after a rocket attack on Baghdad triggered fresh concern over the potential for conflict in the Middle East, a day after markets were roiled by an Iranian missile strike on Iraqi bases hosting U.S. forces.

But gains were muted as Washington and Tehran looked to defuse a crisis in the crude-producing region.

Brent crude futures rose 43 cents, or 0.7%, to $65.87 a barrel by 0109 GMT, after seesawing through Wednesday to end with a 4.1% tumble. They are now a little down on prices before the Jan. 3 killing of Iranian military commander Qassem Soleimani in a U.S. drone attack that sparked the crisis.

West Texas Intermediate futures added 61 cents, or 1%, to $60.22 after falling nearly 5% in the previous session.

In Thursday’s attack, two rockets fell on Baghdad’s Green Zone, which houses foreign missions and government buildings. There were no casualties, and no immediate claim of responsibility, but the strike served as a reminder that the region remains on tenterhooks.

“We need to be guarded about further sharp declines this week, as we will probably see more activity by proxy militias in Iraq,” said Stratfor oil analyst, Greg Priddy.

Still, he said, “our view remains that in the absence of actual losses from conflict with Iran, the market will see mild downward pressure in Q1 on inventory builds.”

That pressure was evident on Thursday as a result of a surprise build in U.S. crude stockpiles last week.

Crude oil stocks were up by 1.2 million barrels in the week ended Jan. 3 to 431.1 million barrels, against analysts’ forecasts in a Reuters poll for a 3.6 million-barrel drop.

Meanwhile, J.P. Morgan maintained its forecast for Brent to average $64.50 a barrel this year.

“The impact on oil prices will depend on (the) extent of supply disruption versus available spare capacity, global oil inventories and reaction to oil price from U.S. producers,” the bank said in a commodities research note.

Brent jumps nearly $3 after US air strike kills Iran, Iraq officials

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Reuters
KEY POINTS
  • Brent crude futures jumped nearly $3 to hit a high of $69.16 a barrel, the highest since Sept. 17.
  • U.S. West Texas Intermediate (WTI) crude futures rose $1.76, or 2.9%, to $62.94 a barrel.
  • An air strike at the Baghdad International Airport early on Friday killed Iranian Major-General Qassem Suleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, an Iraqi militia spokesman told Reuters. The Pentagon later confirmed it was a U.S. air strike that killed Suleimani.
Reusable: Oil tanker France sunset 151016
Jean-Paul Pelissier | Reuters

Brent crude futures jumped close to $3 on Friday to their highest since September after a U.S. air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies.

Brent crude futures jumped nearly $3 to hit a high of $69.16 a barrel, the highest since Sept. 17. The front-month Brent March contract was at $68.25 a barrel, up $2.00, or 3%, by 0258 GMT.

U.S. West Texas Intermediate (WTI) crude futures rose $1.76, or 2.9%, to $62.94 a barrel. Earlier, it touched $63.84 a barrel, highest since May 1.

“The supply side risks remain elevated in the Middle East and we could see tensions continue to elevate between the U.S. and Iran-backed militia in Iraq,” said Edward Moya, analyst at brokerage OANDA, in an e-mail to Reuters.

An air strike at the Baghdad International Airport early on Friday killed Iranian Major-General Qassem Suleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, an Iraqi militia spokesman told Reuters.

The Pentagon later confirmed it was a U.S. air strike that killed Suleimani.

Oil prices were also lifted by China’s central bank saying on Wednesday it was cutting the amount of cash that banks must hold in reserve, releasing around 800 billion yuan ($115 billion) in funds to shore up the slowing Chinese economy.

This came shortly after data showed China’s production continued to grow at a solid pace and business confidence shot up.

“Oil prices still have room for further upside as many analysts are still having to upgrade their demand forecasts to include a rather calm period on the trade front,” Moya said, referring to the warming trade relation between China and the United States.

“President Trump is likely to take a break on being ‘tariff man’ until we get beyond the presidential election in November.”

Oil rises supported by US-China trade optimism, Middle East tensions

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Reuters
KEY POINTS
  • Global benchmark Brent crude futures, were up 22 cents, or 0.3%, to 66.22 a barrel by 0430 GMT.
  • U.S. West Texas Intermediate (WTI) crude was up 18 cents, or 0.3%, at $61.24 per barrel.
  • Oil markets were closed on Wednesday for New Year’s Day.
Reusable: Iraq Oil Daura oil refinery Bagdad 091105
An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
Getty Images

Oil prices kicked off the new year higher on Thursday as warming trade relations between the United States and China eased demand concerns, while rising tensions in the Middle East fuelled worries about supply.

Global benchmark Brent crude futures, were up 22 cents, or 0.3%, to 66.22 a barrel by 0430 GMT. U.S. West Texas Intermediate (WTI) crude was up 18 cents, or 0.3%, at $61.24 per barrel.

Oil markets were closed on Wednesday for New Year’s Day.

Both benchmarks ended higher in 2019, posting their biggest annual gains since 2016, buoyed at the end of the year by a thaw in the prolonged trade dispute between the United States and China – the world’s two largest economies – and a deeper output cut pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies.

“Oil remains supported by the back-burner trade truce and the uptick in political unrest in Iraq,” said Stephen Innes, chief Asia market strategist at AxiTrader.

The U.S. military carried out air strikes against Iran-backed Katib Hezbollah militia group over the weekend. Angry at the air strikes, protesters stormed the U.S. Embassy in Baghdad on Wednesday, although they withdrew after the United States deployed extra troops.

In 2020, Brent is forecast to average $63.07 a barrel, up from December’s estimate of $62.50, while WTI is forecast to average $57.70 a barrel, up from December’s estimate of $57.30, as the OPEC-led supply cuts and the expectations of a U.S.-China trade deal boosted analysts’ views on the prospects for the year, a Reuters poll showed.

U.S. President Donald Trump said on Tuesday the U.S.-China Phase 1 trade deal would be signed on Jan. 15 at the White House.

January also marks the start of the deeper output cuts by OPEC and its partners, including Russia. OPEC and its allies have agreed to cut a further of 500,000 barrels per day (bpd) from Jan. 1, on top of their previous cut of 1.2 million bpd that started on Jan. 1 a year ago.

A fall in U.S. crude inventories last week also supported prices. U.S. crude stocks fell 7.8 million barrels in the week ended Dec. 27, compared with analysts’ expectations for a decrease of 3.2 million barrels, according to data from the American Petroleum Institute (API) released on Tuesday.

Official data from the Energy Information Administration (EIA) is due on Friday as the release has been delayed by two days by the New Year’s holiday.

“Traders will look towards Friday’s EIA report for forward guidance on oil prices,” said Benjamin Lu, analyst at Singapore-based brokerage Phillip Futures.

Oil skids as U.S. inventories pile up, but demand hopes stem bigger drop

REUTERS

SINGAPORE (Reuters) – Oil prices dropped on Wednesday after U.S. industry data showed a surprise build in crude inventories, but expectations for firmer demand next year kept losses in check.

Brent crude futures LCOc1 dropped 38 cents, or 0.57%, to $65.72 a barrel by 0730 GMT on Wednesday. The international benchmark rose 1.2% to $66.10 a barrel on Tuesday.

West Texas Intermediate (WTI) crude futures CLc1 fell 46 cents, or 0.75%, to $60.48 per barrel.

Wednesday’s declines followed a gain of more than 1% in the previous session as the “phase one” U.S.-China trade deal announced last week eased pressure on the oil benchmarks.

Prior to the agreement, oil markets were hampered by worries over the economic impact of the trade dispute between the world’s two biggest oil consumers.

“The sizzling oil market rally came to a grinding halt after an unexpected climb in the weekly U.S. crude inventory report,” said Stephen Innes, market strategist at AxiTrader. However, he added that “it’s unlikely to be a game-changer.”

“Investors have transcended the trade deal-inspired relief rally euphoria, and are now banking on a fundamental demand-driven shift that could quicken the pace of the oil market rebalancing in the first quarter of 2020.”

U.S. crude inventories climbed 4.7 million barrels in the week to Dec. 13 to 452 million, compared with analysts’ expectations for a draw of 1.3 million barrels, data from industry group the American Petroleum Institute showed.

But a drop in official inventory data from the U.S. Energy Information Administration (EIA) due later on Wednesday could give oil more upward impetus, said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.

The drop in prices Wednesday morning “are minuscule, with oil’s price action continuing to be constructive,” Halley said.

Deeper production cuts coming from the Organization of the Petroleum Exporting Countries and allies such as Russia – a group known as OPEC+ – also continued to support market sentiment and prevented a further slide in prices.

OPEC+, which has cut production by 1.2 million barrels per day (bpd) since Jan. 1 this year, will make a further oil supply cut of 500,000 bpd from Jan. 1, 2020, to support the market.

Reporting by Koustav Samanta; Editing by Jacqueline Wong and Tom Hogue

Oil drops after US inventory build, new output record

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Reuters
KEY POINTS
  • Brent crude futures were down 18 cents, or 0.3%, at $63.88 a barrel by 0517 GMT, having dropped 0.3% on Wednesday.
  • U.S. West Texas Intermediate crude fell 24 cents, or 0.4%, to $57.87, after falling 0.5% in the previous session.
GP: US Oil workers Oil Boom in Texas's Permian Basin 1
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

Oil prices fell on Thursday, extending losses from the previous session after official data showed U.S. crude and gasoline stocks rose against expectations as production hit a record.

Brent crude futures were down 18 cents, or 0.3%, at $63.88 a barrel by 0517 GMT, having dropped 0.3% on Wednesday.

U.S. West Texas Intermediate crude fell 24 cents, or 0.4%, to $57.87, after falling 0.5% in the previous session.

Crude stockpiles in the United States swelled 1.6 million barrels last week as production hit a record high of 12.9 million barrels per day (bpd) and refinery runs slowed, the Energy Information Administration said. Analysts in a Reuters poll had forecast a drop of 418,000 barrels.

More bearish was a 5.1 million-barrel rise in gasoline stocks, compared with forecasts for a 1.2 million-barrel gain.

“Stubbornly high U.S. crude inventories have seen oil prices ease in Asia today,” said Jeffrey Halley, senior market analyst at OANDA. But “dips … are likely to be limited for now, as the U.S. holiday mutes activity,” he added.

Oil prices had risen this week on expectations that China and the United States, the world’s two biggest crude users, would soon sign a preliminary agreement, putting an end to their 16-month trade dispute.

Forces based in eastern Libya said on Wednesday they had driven rival factions from the 70,000-bpd El Feel oilfield after attacking the area with air strikes, leading to production being halted and raising some worries about supply.

In the United States, energy services company Baker Hughes reported that U.S. oil drillers reduced the number of drilling rigs for a record 12 months in a row.

Drillers cut three oil rigs in the week to Nov. 27, bringing the count down to 668, lowest since April 2017, Baker Hughes said in its report released a day early due to the U.S. Thanksgiving holiday.